What is the best way to set up crowd animations?
In my opinion, there are two viable options open to you, one is to use the boids particle simulation with animated armatures, but this would limit you to a single animation (for Minecraft characters this might indeed work). Note that the armature object being replicated by the particle system needs to be on the same layer as the particle simulation. 

the second option is to use the Animation Replicator with Offset addon from blenderdiplom on a bunch of different models using follow curve modifiers.. again, this would limit you to one animation. There's a handy tutorial on their site showing how to use it. 

In both instances you could have replicate small numbers of characters but use more than one particle system/curves with different animations for a bit of variety, but it would take a LOT of work. In either methods, there would be no way to have opposing teams react to each other and trigger 'fight' animations, for instance. 

Since it's Minecraft and the animation would most likely be quite simple, my suggestion would be use boids (check out David Ward's youtube channel, he has a video tutorial showing this exact thing, then when you have a good basic crowd, you could Apply the particle modifiers and then manually add the arm swinging/fighting/dying animations. Like I say, for 200 characters this would be a lot of work, but if working with actions, the NLA editor would save you a bit of work here. 

Good luck!